HomeBusiness Digest‘Auction floors unlikely to move to the farmers’

‘Auction floors unlikely to move to the farmers’

Bernard Mpofu

THIS year’s plans to decentralise tobacco auction floors from the capital on the back of a projected rise in tobacco deliveries could face further delays owing to limited investment in the industry, a top official said.

Following a feasibility study on decentralisation of the tobacco industry, which involves setting up auction floors closer to tobacco growing regions, a move aimed at cushioning growers from transport and accommodation overheads, the Tobacco Industry and Marketing Board (TIMB) this year expected operators to buy into the ambitious project.

But TIMB CEO Andrew Matibiri on Wednesday said it was highly unlikely that tobacco auction floor operators would move the floors to the farmers because of tight liquidity on the market.

“As of now we have not received any serious applications to operate any auction floor outside Harare. I have had up to four enquiries on that issue and we are still in preliminary stages,” Matibiri said on the sidelines of a function marking the beginning of the marketing season.

“The issue is investment –– one needs infrastructure almost similar to the ones you have at auction floors in the capital. Hospitality for buyers and growers alike should also be standard and most importantly the stakeholders have to support that business.”

Although Wednesday’s deliveries were far below daily peak sales of 18 000 bales, Matibiri said the tobacco marketing season had opened on a higher note in terms of volumes compared to last year.

One of the two main auction floors this year opened the floors to growers.

In 2010 two auction floors –– Tobacco Sales Floor and Boka Tobacco Auction Floors –– operated the country’s auction floors after another auction floor, BMZ, closed down earlier on.

Boka Investment, which is expected to operate in April, is currently sprucing up the auction floors after TIMB gave an operating licence to the property owners currently engaged in a bitter legal battle with long-standing tenants, Zitac.

Boka is seeking an eviction order on Zitac and accuses the firm of breaching a decade-long lease agreement.

Zitac earlier this year said it would consider owning an auction floor outside Harare in future. But should the courts rule in favour of Boka Investment, the beleaguered golden leaf auctioneer could be out of business.

Officially opening the marketing season, Agriculture, mechanisation and Irrigation Development minister Joseph Made said government would strictly monitor the goings on at tobacco auction floors amid concerns raised by growers last year over alleged corrupt activities, price wars and inhabitable conditions for farmers at the floors.

During the 2010 marketing season, a serious decline in the average price of nearly US$3 prompted massive withdrawals of tobacco from the auction floors eight weeks into the season.

“I have directed TIMB and all players to put in place strategies that will ensure respect to tobacco farmers. My ministry will be monitoring the floors closely so that these problems do not re-occur,” Made pledged.

Made said an estimated 78 380 hectares of the golden leaf had been planted by year-end up from 65 000 hectares grown last year. Government is targeting 150 million kilograms of the cash crop from 90 000 hectares shared between contract, self-financing and communal farmers.

Last year tobacco, a top foreign exchange earner, generated more than US$300 million after deliveries surpassed government projections of 93 million kilograms.

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